Visitor industry groups say New Zealand’s faltering tourism recovery will stall for longer as the Government piles on more costs to enter the country.
Figures out today show the number of overseas arrivals reached 3.2 million in the year to June, 17% down on the pre-pandemic peak.
The number of overseas arrivals has hovered at around 80% of pre-Covid levels for the last year.
“The improvement in tourism inflows into New Zealand looks to have stalled, with numbers well below pre-Covid peaks,” say ASB economists.
Tourism groups are increasingly worried about the slow recovery in the sector – once New Zealand’s biggest foreign exchange earner – and the Government’s willingness to heap more costs on those coming here.
Visa charges are soaring and the International Visitor Levy (IVL) could rise by as much as three times to $100 for many tourists outside of Australia and the Pacific.
The Board of Airline Representatives (Barnz) says that steep increases to visa costs will cut tourist arrivals to New Zealand, with wide-ranging impacts.
“It is difficult to understand why New Zealand would choose to increase visa fees so sharply when New Zealand is experiencing softening demand for international visitors,” said its executive director Cath O’Brien.
The new fee structure means the cost of a visitor visa will rise by $130 to $341 per person (a 61% increase) – hitting the key markets of China and India – and a working holiday visa will rise by $250 to $670 per person (a 59% increase).
O’Brien said the increases followed a closed consultation process which did not include the aviation sector and was announced late last Friday.
“Given the Government has now raised costs for visitors, students and workers who wish to come to New Zealand, adding more cost in the form of an increased IVL should be taken off the table,” she said.
“We’re not even asking for any extra investment. We’re just asking them to stop chopping it [tourism] off [at] the knees.”
Planned air services for New Zealand for summer 2024 reveals just a 2% increase on summer 2023.
“New Zealand’s tourism recovery has slowed almost to standstill. Yet New Zealand is piling cost on to those same international visitors we claim we want to attract.”
When the visa cost rises were announced, Immigration Minister Erica Stanford said the changes were aimed at the system being self-funded and new charges would raise $563 million for the Government over the next four years.
Tourism and Hospitality Minister Matt Doocey said it was appropriate international visitors contributed towards the costs associated with providing and maintaining the high-quality visitor experiences they have while travelling here.
“I do not anticipate that the overall number of people that choose to visit New Zealand and the amount they spend will change significantly because of the increase.”
Doocey said the majority of international visitors to New Zealand come from visa-waiver countries so aren’t required to apply for a visitor visa.
But O’Brien said a reduction in tourist arrivals will in time reduce air connectivity, which will reduce available cargo space to and from New Zealand.
“We cannot risk turning the stalling tourism market into a formal decline by endlessly increasing costs for those who wish to contribute to New Zealand’s economy. If we do, we will cement a tourism decline which will take years to recover from.”
“Any reduction in international visitors will impact a wide range of New Zealand businesses. Beyond airlines, this means the accommodation sector, tourism experiences, hospitality and others.”
Tourism Industry Aotearoa (TIA) has calculated that significant increases in visa fees and levies for tourism-related categories could lead to a notable drop in visitor numbers, potentially reducing international visitor arrivals by up to 24,500 and risking $120m in visitor expenditure.
International visitors contribute substantially to New Zealand’s economy, generating $7.3 billion in government revenue pre-Covid, including $3.8b in GST. Each visitor contributes an average of $849 to Crown revenue, TIA says.
Working holiday visitors are crucial to New Zealand’s workforce, especially in the tourism industry, with 37% of businesses hiring them over the summer and increased visa costs could deter these essential workers, said TIA chief executive Rebecca Ingram.
“We urge the Government to factor in the broader economic benefits that international visitors bring and our export earnings, rather than focusing solely on making the immigration system self-funding at the expense of our tourism sector.”
NZ Airports Association chief executive Billie Moore said the $341 visitor visa for New Zealand, is 69% more than Australia, a key tourism rival.
“The truth is that visitors will be turned off by paying over $300 just for their visa. Most Kiwis would be too, if they were in their shoes. And visitors have plenty of other choices for their travel, with most of our competitor countries focused on making themselves more attractive, rather than more expensive,” she said.
“We might better understand the Government’s approach if it were complemented by an export growth plan that shows joined up thinking across all government agencies, including on how we might recover this lost demand.”
Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
BGH's tilt at Tourism Holdings has sparked more merger and acquisition speculation.